Bill Text: MN SF2872 | 2013-2014 | 88th Legislature | Introduced

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Bill Title: Miscellaneous tax provisions repeal and reinstatement; appropriation

Spectrum: Partisan Bill (Republican 3-0)

Status: (Introduced - Dead) 2014-03-21 - Referred to Taxes [SF2872 Detail]

Download: Minnesota-2013-SF2872-Introduced.html

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A bill for an act

relating to taxation; repealing various tax provisions and reinstating certain
exemptions; appropriating money;amending Minnesota Statutes 2012, sections
289A.02, subdivision 7; 289A.08, subdivision 7; 290.01, subdivision 19a,
by adding a subdivision; 290.067, subdivision 2a; 290.0671, subdivision 1;
290.0675, subdivision 1; 297A.68, by adding a subdivision; Minnesota Statutes
2013 Supplement, sections 270B.01, subdivision 8; 270B.03, subdivision 1;
290.01, subdivisions 19, 19b, 31; 290.06, subdivision 2c; 290.091, subdivision
2; 290A.03, subdivision 15; 291.005, subdivision 1; 291.03, subdivision 1;
297A.61, subdivision 3; repealing Minnesota Statutes 2013 Supplement, sections
292.16; 292.17; 292.18; 292.19; 292.20; 292.21.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

    Section 1. Minnesota Statutes 2013 Supplement, section 270B.01, subdivision 8, is
amended to read:
    Subd. 8. Minnesota tax laws. For purposes of this chapter only, unless expressly
stated otherwise, "Minnesota tax laws" means:
    (1) the taxes, refunds, and fees administered by or paid to the commissioner under
chapters 115B, 289A (except taxes imposed under sections 298.01, 298.015, and 298.24),
290, 290A, 291, 292, 295, 297A, 297B, 297H, and 403, or any similar Indian tribal tax
administered by the commissioner pursuant to any tax agreement between the state and
the Indian tribal government, and includes any laws for the assessment, collection, and
enforcement of those taxes, refunds, and fees; and
    (2) section 273.1315.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Minnesota Statutes 2013 Supplement, section 270B.03, subdivision 1, is
amended to read:
    Subdivision 1. Who may inspect. Returns and return information must, on request,
be made open to inspection by or disclosure to the data subject. The request must be made
in writing or in accordance with written procedures of the chief disclosure officer of the
department that have been approved by the commissioner to establish the identification
of the person making the request as the data subject. For purposes of this chapter, the
following are the data subject:
(1) in the case of an individual return, that individual;
(2) in the case of an income tax return filed jointly, either of the individuals with
respect to whom the return is filed;
(3) in the case of a return filed by a business entity, an officer of a corporation,
a shareholder owning more than one percent of the stock, or any shareholder of an S
corporation; a general partner in a partnership; the owner of a sole proprietorship; a
member or manager of a limited liability company; a participant in a joint venture; the
individual who signed the return on behalf of the business entity; or an employee who is
responsible for handling the tax matters of the business entity, such as the tax manager,
bookkeeper, or managing agent;
(4) in the case of an estate return:
(i) the personal representative or trustee of the estate; and
(ii) any beneficiary of the estate as shown on the federal estate tax return;
(5) in the case of a trust return:
(i) the trustee or trustees, jointly or separately; and
(ii) any beneficiary of the trust as shown in the trust instrument;
(6) if liability has been assessed to a transferee under section 270C.58, subdivision
1 , the transferee is the data subject with regard to the returns and return information
relating to the assessed liability;
(7) in the case of an Indian tribal government or an Indian tribal government-owned
entity,
(i) the chair of the tribal government, or
(ii) any person authorized by the tribal government; and
(8) in the case of a successor as defined in section 270C.57, subdivision 1, paragraph
(b), the successor is the data subject and information may be disclosed as provided by
section 270C.57, subdivision 4; and
(9) in the case of a gift return, the donor.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2012, section 289A.02, subdivision 7, is amended to read:
    Subd. 7. Internal Revenue Code. Unless specifically defined otherwise, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through April
14, 2011 January 3, 2013.
EFFECTIVE DATE.This section is effective retroactively for taxable years
beginning after December 31, 2012.

    Sec. 4. Minnesota Statutes 2012, section 289A.08, subdivision 7, is amended to read:
    Subd. 7. Composite income tax returns for nonresident partners, shareholders,
and beneficiaries. (a) The commissioner may allow a partnership with nonresident
partners to file a composite return and to pay the tax on behalf of nonresident partners who
have no other Minnesota source income. This composite return must include the names,
addresses, Social Security numbers, income allocation, and tax liability for the nonresident
partners electing to be covered by the composite return.
(b) The computation of a partner's tax liability must be determined by multiplying
the income allocated to that partner by the highest rate used to determine the tax liability
for individuals under section 290.06, subdivision 2c. Nonbusiness deductions, standard
deductions, or personal exemptions are not allowed.
(c) The partnership must submit a request to use this composite return filing method
for nonresident partners. The requesting partnership must file a composite return in the
form prescribed by the commissioner of revenue. The filing of a composite return is
considered a request to use the composite return filing method.
(d) The electing partner must not have any Minnesota source income other than the
income from the partnership and other electing partnerships. If it is determined that the
electing partner has other Minnesota source income, the inclusion of the income and tax
liability for that partner under this provision will not constitute a return to satisfy the
requirements of subdivision 1. The tax paid for the individual as part of the composite return
is allowed as a payment of the tax by the individual on the date on which the composite
return payment was made. If the electing nonresident partner has no other Minnesota
source income, filing of the composite return is a return for purposes of subdivision 1.
(e) This subdivision does not negate the requirement that an individual pay estimated
tax if the individual's liability would exceed the requirements set forth in section 289A.25.
The individual's liability to pay estimated tax is, however, satisfied when the partnership
pays composite estimated tax in the manner prescribed in section 289A.25.
(f) If an electing partner's share of the partnership's gross income from Minnesota
sources is less than the filing requirements for a nonresident under this subdivision, the tax
liability is zero. However, a statement showing the partner's share of gross income must
be included as part of the composite return.
(g) The election provided in this subdivision is only available to a partner who has
no other Minnesota source income and who is either (1) a full-year nonresident individual
or (2) a trust or estate that does not claim a deduction under either section 651 or 661 of
the Internal Revenue Code.
(h) A corporation defined in section 290.9725 and its nonresident shareholders may
make an election under this paragraph. The provisions covering the partnership apply to
the corporation and the provisions applying to the partner apply to the shareholder.
(i) Estates and trusts distributing current income only and the nonresident individual
beneficiaries of the estates or trusts may make an election under this paragraph. The
provisions covering the partnership apply to the estate or trust. The provisions applying to
the partner apply to the beneficiary.
(j) For the purposes of this subdivision, "income" means the partner's share of
federal adjusted gross income from the partnership modified by the additions provided in
section 290.01, subdivision 19a, clauses (6) to (10) (9), and the subtractions provided in:
(i) section 290.01, subdivision 19b, clause (8), to the extent the amount is assignable or
allocable to Minnesota under section 290.17; and (ii) section 290.01, subdivision 19b,
clause (13). The subtraction allowed under section 290.01, subdivision 19b, clause (8), is
only allowed on the composite tax computation to the extent the electing partner would
have been allowed the subtraction.
EFFECTIVE DATE.This section is effective retroactively for taxable years
beginning after December 31, 2012.

    Sec. 5. Minnesota Statutes 2013 Supplement, section 290.01, subdivision 19, is
amended to read:
    Subd. 19. Net income. The term "net income" means the federal taxable income,
as defined in section 63 of the Internal Revenue Code of 1986, as amended through the
date named in this subdivision, incorporating the federal effective dates of changes to the
Internal Revenue Code and any elections made by the taxpayer in accordance with the
Internal Revenue Code in determining federal taxable income for federal income tax
purposes, and with the modifications provided in subdivisions 19a to 19f.
    In the case of a regulated investment company or a fund thereof, as defined in section
851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment
company taxable income as defined in section 852(b)(2) of the Internal Revenue Code,
except that:
    (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal
Revenue Code does not apply;
    (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal
Revenue Code must be applied by allowing a deduction for capital gain dividends and
exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal
Revenue Code; and
    (3) the deduction for dividends paid must also be applied in the amount of any
undistributed capital gains which the regulated investment company elects to have treated
as provided in section 852(b)(3)(D) of the Internal Revenue Code.
    The net income of a real estate investment trust as defined and limited by section
856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust
taxable income as defined in section 857(b)(2) of the Internal Revenue Code.
    The net income of a designated settlement fund as defined in section 468B(d) of
the Internal Revenue Code means the gross income as defined in section 468B(b) of the
Internal Revenue Code.
    The Internal Revenue Code of 1986, as amended through April 14, 2011 January 3,
2013, shall be in effect for taxable years beginning after December 31, 1996, and before
January 1, 2012, and for taxable years beginning after December 31, 2012. The Internal
Revenue Code of 1986, as amended through January 3, 2013, is in effect for taxable years
beginning after December 31, 2011, and before January 1, 2013.
The provisions of sections 315 and 331 of the American Taxpayer Relief Act of
2012, Public Law 112-240, extension of increased expensing limitations and treatment
of certain real property as section 179 property and extension and modification of bonus
depreciation, are effective at the same time they become effective for federal purposes.
    Except as otherwise provided, references to the Internal Revenue Code in
subdivisions 19 to 19f mean the code in effect for purposes of determining net income for
the applicable year.
EFFECTIVE DATE.This section is effective the day following final enactment,
except the changes incorporated by federal changes are effective retroactively at the same
time as the changes were effective for federal purposes.

    Sec. 6. Minnesota Statutes 2012, section 290.01, subdivision 19a, is amended to read:
    Subd. 19a. Additions to federal taxable income. For individuals, estates, and
trusts, there shall be added to federal taxable income:
    (1)(i) interest income on obligations of any state other than Minnesota or a political
or governmental subdivision, municipality, or governmental agency or instrumentality
of any state other than Minnesota exempt from federal income taxes under the Internal
Revenue Code or any other federal statute; and
    (ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue
Code, except:
(A) the portion of the exempt-interest dividends exempt from state taxation under
the laws of the United States; and
(B) the portion of the exempt-interest dividends derived from interest income
on obligations of the state of Minnesota or its political or governmental subdivisions,
municipalities, governmental agencies or instrumentalities, but only if the portion of the
exempt-interest dividends from such Minnesota sources paid to all shareholders represents
95 percent or more of the exempt-interest dividends, including any dividends exempt
under subitem (A), that are paid by the regulated investment company as defined in section
851(a) of the Internal Revenue Code, or the fund of the regulated investment company as
defined in section 851(g) of the Internal Revenue Code, making the payment; and
    (iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal
government described in section 7871(c) of the Internal Revenue Code shall be treated as
interest income on obligations of the state in which the tribe is located;
    (2) to the extent allowed as a deduction under section 63(d) of the Internal Revenue
Code, the amount of income, sales and use, motor vehicle sales, or excise taxes paid or
accrued within the taxable year under this chapter and the amount of taxes based on net
income paid, sales and use, motor vehicle sales, or excise taxes paid to any other state or
to any province or territory of Canada, to the extent allowed as a deduction under section
63(d) of the Internal Revenue Code, but the addition may not be more than the amount by
which the itemized deductions as allowed under section 63(d) of the Internal Revenue
Code state itemized deduction exceeds the amount of the standard deduction as defined
in section 63(c) of the Internal Revenue Code, disregarding the amounts allowed under
sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue Code, minus any addition
that would have been required under clause (21) if the taxpayer had claimed the standard
deduction. For the purpose of this paragraph, the disallowance of itemized deductions
under section 68 of the Internal Revenue Code of 1986, income, sales and use, motor
vehicle sales, or excise taxes are the last itemized deductions disallowed. For purposes
of this clause, income, sales and use, motor vehicle sales, and excise taxes are the last
itemized deductions disallowed under clause (13);
    (3) the capital gain amount of a lump-sum distribution to which the special tax under
section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law 99-514, applies;
    (4) the amount of income taxes paid or accrued within the taxable year under this
chapter and taxes based on net income paid to any other state or any province or territory
of Canada, to the extent allowed as a deduction in determining federal adjusted gross
income. For the purpose of this paragraph, income taxes do not include the taxes imposed
by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
    (5) the amount of expense, interest, or taxes disallowed pursuant to section 290.10
other than expenses or interest used in computing net interest income for the subtraction
allowed under subdivision 19b, clause (1);
    (6) the amount of a partner's pro rata share of net income which does not flow
through to the partner because the partnership elected to pay the tax on the income under
section 6242(a)(2) of the Internal Revenue Code;
    (7) 80 percent of the depreciation deduction allowed under section 168(k) of the
Internal Revenue Code. For purposes of this clause, if the taxpayer has an activity that
in the taxable year generates a deduction for depreciation under section 168(k) and the
activity generates a loss for the taxable year that the taxpayer is not allowed to claim for
the taxable year, "the depreciation allowed under section 168(k)" for the taxable year is
limited to excess of the depreciation claimed by the activity under section 168(k) over the
amount of the loss from the activity that is not allowed in the taxable year. In succeeding
taxable years when the losses not allowed in the taxable year are allowed, the depreciation
under section 168(k) is allowed;
    (8) 80 percent of the amount by which the deduction allowed by section 179 of the
Internal Revenue Code exceeds the deduction allowable by section 179 of the Internal
Revenue Code of 1986, as amended through December 31, 2003;
    (9) to the extent deducted in computing federal taxable income, the amount of the
deduction allowable under section 199 of the Internal Revenue Code;
    (10) for taxable years beginning before January 1, 2013, the exclusion allowed under
section 139A of the Internal Revenue Code for federal subsidies for prescription drug plans;
(11) the amount of expenses disallowed under section 290.10, subdivision 2;
    (12) for taxable years beginning before January 1, 2010, the amount deducted for
qualified tuition and related expenses under section 222 of the Internal Revenue Code, to
the extent deducted from gross income;
    (13) for taxable years beginning before January 1, 2010, the amount deducted for
certain expenses of elementary and secondary school teachers under section 62(a)(2)(D)
of the Internal Revenue Code, to the extent deducted from gross income;
(14) the additional standard deduction for property taxes payable that is allowable
under section 63(c)(1)(C) of the Internal Revenue Code;
(15) the additional standard deduction for qualified motor vehicle sales taxes
allowable under section 63(c)(1)(E) of the Internal Revenue Code;
(16) (11) discharge of indebtedness income resulting from reacquisition of business
indebtedness and deferred under section 108(i) of the Internal Revenue Code;
(17) the amount of unemployment compensation exempt from tax under section
85(c) of the Internal Revenue Code;
(18) (12) changes to federal taxable income attributable to a net operating loss that
the taxpayer elected to carry back for more than two years for federal purposes but for
which the losses can be carried back for only two years under section 290.095, subdivision
11 , paragraph (c);
(19) (13) to the extent included in the computation of federal taxable income in
taxable years beginning after December 31, 2010, the amount of disallowed itemized
deductions, but the amount of disallowed itemized deductions plus the addition required
under clause (2) may not be more than the amount by which the itemized deductions as
allowed under section 63(d) of the Internal Revenue Code exceeds the amount of the
standard deduction as defined in section 63(c) of the Internal Revenue Code, disregarding
the amounts allowed under sections 63(c)(1)(C) and 63(c)(1)(E) of the Internal Revenue
Code, and reduced by any addition that would have been required under clause (21) if the
taxpayer had claimed the standard deduction:
(i) the amount of disallowed itemized deductions is equal to the lesser of:
(A) three percent of the excess of the taxpayer's federal adjusted gross income
over the applicable amount; or
(B) 80 percent of the amount of the itemized deductions otherwise allowable to the
taxpayer under the Internal Revenue Code for the taxable year;
(ii) the term "applicable amount" means $100,000, or $50,000 in the case of a
married individual filing a separate return. Each dollar amount shall be increased by
an amount equal to:
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
Revenue Code for the calendar year in which the taxable year begins, by substituting
"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof;
(iii) the term "itemized deductions" does not include:
(A) the deduction for medical expenses under section 213 of the Internal Revenue
Code;
(B) any deduction for investment interest as defined in section 163(d) of the Internal
Revenue Code; and
(C) the deduction under section 165(a) of the Internal Revenue Code for casualty or
theft losses described in paragraph (2) or (3) of section 165(c) of the Internal Revenue
Code or for losses described in section 165(d) of the Internal Revenue Code;
(20) (14) to the extent included in federal taxable income in taxable years beginning
after December 31, 2010, the amount of disallowed personal exemptions for taxpayers
with federal adjusted gross income over the threshold amount:
(i) the disallowed personal exemption amount is equal to the dollar amount of the
personal exemptions claimed by the taxpayer in the computation of federal taxable income
multiplied by the applicable percentage;
(ii) "applicable percentage" means two percentage points for each $2,500 (or
fraction thereof) by which the taxpayer's federal adjusted gross income for the taxable
year exceeds the threshold amount. In the case of a married individual filing a separate
return, the preceding sentence shall be applied by substituting "$1,250" for "$2,500." In
no event shall the applicable percentage exceed 100 percent;
(iii) the term "threshold amount" means:
(A) $150,000 in the case of a joint return or a surviving spouse;
(B) $125,000 in the case of a head of a household;
(C) $100,000 in the case of an individual who is not married and who is not a
surviving spouse or head of a household; and
(D) $75,000 in the case of a married individual filing a separate return; and
(iv) the thresholds shall be increased by an amount equal to:
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) of the Internal
Revenue Code for the calendar year in which the taxable year begins, by substituting
"calendar year 1990" for "calendar year 1992" in subparagraph (B) thereof; and.
(21) to the extent deducted in the computation of federal taxable income, for taxable
years beginning after December 31, 2010, and before January 1, 2013, the difference
between the standard deduction allowed under section 63(c) of the Internal Revenue Code
and the standard deduction allowed for 2011 and 2012 under the Internal Revenue Code
as amended through December 1, 2010.
EFFECTIVE DATE.This section is effective retroactively for taxable years
beginning after December 31, 2012.

    Sec. 7. Minnesota Statutes 2013 Supplement, section 290.01, subdivision 19b, is
amended to read:
    Subd. 19b. Subtractions from federal taxable income. For individuals, estates,
and trusts, there shall be subtracted from federal taxable income:
    (1) net interest income on obligations of any authority, commission, or
instrumentality of the United States to the extent includable in taxable income for federal
income tax purposes but exempt from state income tax under the laws of the United States;
    (2) if included in federal taxable income, the amount of any overpayment of income
tax to Minnesota or to any other state, for any previous taxable year, whether the amount
is received as a refund or as a credit to another taxable year's income tax liability;
    (3) the amount paid to others, less the amount used to claim the credit allowed under
section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
transportation of each qualifying child in attending an elementary or secondary school
situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
resident of this state may legally fulfill the state's compulsory attendance laws, which
is not operated for profit, and which adheres to the provisions of the Civil Rights Act
of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
"textbooks" includes books and other instructional materials and equipment purchased
or leased for use in elementary and secondary schools in teaching only those subjects
legally and commonly taught in public elementary and secondary schools in this state.
Equipment expenses qualifying for deduction includes expenses as defined and limited in
section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
books and materials used in the teaching of religious tenets, doctrines, or worship, the
purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
or materials for, or transportation to, extracurricular activities including sporting events,
musical or dramatic events, speech activities, driver's education, or similar programs. No
deduction is permitted for any expense the taxpayer incurred in using the taxpayer's or
the qualifying child's vehicle to provide such transportation for a qualifying child. For
purposes of the subtraction provided by this clause, "qualifying child" has the meaning
given in section 32(c)(3) of the Internal Revenue Code;
    (4) income as provided under section 290.0802;
    (5) to the extent included in federal adjusted gross income, income realized on
disposition of property exempt from tax under section 290.491;
    (6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
of the Internal Revenue Code in determining federal taxable income by an individual
who does not itemize deductions for federal income tax purposes for the taxable year, an
amount equal to 50 percent of the excess of charitable contributions over $500 allowable
as a deduction for the taxable year under section 170(a) of the Internal Revenue Code,
under the provisions of Public Law 109-1 and Public Law 111-126;
    (7) for individuals who are allowed a federal foreign tax credit for taxes that do not
qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
of subnational foreign taxes for the taxable year, but not to exceed the total subnational
foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
"federal foreign tax credit" means the credit allowed under section 27 of the Internal
Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
the extent they exceed the federal foreign tax credit;
    (8) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (7), or 19c, clause (12), in the case of a
shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
delayed depreciation. For purposes of this clause, "delayed depreciation" means the amount
of the addition made by the taxpayer under subdivision 19a, clause (7), or subdivision 19c,
clause (12), in the case of a shareholder of an S corporation, minus the positive value of
any net operating loss under section 172 of the Internal Revenue Code generated for the
tax year of the addition. The resulting delayed depreciation cannot be less than zero;
    (9) job opportunity building zone income as provided under section 469.316;
    (10) to the extent included in federal taxable income, the amount of compensation
paid to members of the Minnesota National Guard or other reserve components of the
United States military for active service, excluding compensation for services performed
under the Active Guard Reserve (AGR) program. For purposes of this clause, "active
service" means (i) state active service as defined in section 190.05, subdivision 5a, clause
(1); or (ii) federally funded state active service as defined in section 190.05, subdivision
5b , but "active service" excludes service performed in accordance with section 190.08,
subdivision 3 ;
    (11) to the extent included in federal taxable income, the amount of compensation
paid to Minnesota residents who are members of the armed forces of the United States
or United Nations for active duty performed under United States Code, title 10; or the
authority of the United Nations;
    (12) an amount, not to exceed $10,000, equal to qualified expenses related to a
qualified donor's donation, while living, of one or more of the qualified donor's organs
to another person for human organ transplantation. For purposes of this clause, "organ"
means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
"human organ transplantation" means the medical procedure by which transfer of a human
organ is made from the body of one person to the body of another person; "qualified
expenses" means unreimbursed expenses for both the individual and the qualified donor
for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
may be subtracted under this clause only once; and "qualified donor" means the individual
or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
individual may claim the subtraction in this clause for each instance of organ donation for
transplantation during the taxable year in which the qualified expenses occur;
    (13) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (8), or 19c, clause (13), in the case of a
shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (13), in the
case of a shareholder of a corporation that is an S corporation, minus the positive value of
any net operating loss under section 172 of the Internal Revenue Code generated for the
tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
subtraction is not allowed under this clause;
    (14) to the extent included in the federal taxable income of a nonresident of
Minnesota, compensation paid to a service member as defined in United States Code, title
10, section 101(a)(5), for military service as defined in the Servicemembers Civil Relief
Act, Public Law 108-189, section 101(2);
    (15) to the extent included in federal taxable income, the amount of national service
educational awards received from the National Service Trust under United States Code,
title 42, sections 12601 to 12604, for service in an approved Americorps National Service
program;
(16) to the extent included in federal taxable income, discharge of indebtedness
income resulting from reacquisition of business indebtedness included in federal taxable
income under section 108(i) of the Internal Revenue Code. This subtraction applies only
to the extent that the income was included in net income in a prior year as a result of the
addition under section 290.01, subdivision 19a, clause (16);
(17) the amount of the net operating loss allowed under section 290.095, subdivision
11 , paragraph (c); and
(18) the amount of expenses not allowed for federal income tax purposes due
to claiming the railroad track maintenance credit under section 45G(a) of the Internal
Revenue Code.;
(19) the amount of the limitation on itemized deductions under section 68(b) of
the Internal Revenue Code; and
(20) the amount of the phaseout of personal exemptions under section 151(d) of the
Internal Revenue Code.
EFFECTIVE DATE.This section is effective retroactively for taxable years
beginning after December 31, 2012.

    Sec. 8. Minnesota Statutes 2012, section 290.01, is amended by adding a subdivision
to read:
    Subd. 29a. State itemized deduction. The term "state itemized deduction" means
federal itemized deductions, as defined in section 63(d) of the Internal Revenue Code,
disregarding any limitation under section 68 of the Internal Revenue Code, and reduced
by the amount of the addition required under subdivision 19a, clause (13).
EFFECTIVE DATE.This section is effective retroactively for taxable years
beginning after December 31, 2012.

    Sec. 9. Minnesota Statutes 2013 Supplement, section 290.01, subdivision 31, is
amended to read:
    Subd. 31. Internal Revenue Code. Unless specifically defined otherwise, for
taxable years beginning before January 1, 2012, and after December 31, 2012, "Internal
Revenue Code" means the Internal Revenue Code of 1986, as amended through April 14,
2011; and for taxable years beginning after December 31, 2011, and before January 1,
2013, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
through January 3, 2013. Internal Revenue Code also includes any uncodified provision in
federal law that relates to provisions of the Internal Revenue Code that are incorporated
into Minnesota law. When used in this chapter, the reference to "subtitle A, chapter 1,
subchapter N, part 1, of the Internal Revenue Code" is to the Internal Revenue Code as
amended through March 18, 2010.
EFFECTIVE DATE.This section is effective the day following final enactment,
except the changes incorporated by federal changes are effective retroactively at the same
time the changes were effective for federal purposes.

    Sec. 10. Minnesota Statutes 2013 Supplement, section 290.06, subdivision 2c, is
amended to read:
    Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income
taxes imposed by this chapter upon married individuals filing joint returns and surviving
spouses as defined in section 2(a) of the Internal Revenue Code must be computed by
applying to their taxable net income the following schedule of rates:
    (1) On the first $35,480, 5.35 percent;
    (2) On all over $35,480, but not over $140,960, 7.05 percent;
    (3) On all over $140,960, but not over $250,000, 7.85 percent;
(4) On all over $250,000, 9.85 percent.
    Married individuals filing separate returns, estates, and trusts must compute their
income tax by applying the above rates to their taxable income, except that the income
brackets will be one-half of the above amounts.
    (b) The income taxes imposed by this chapter upon unmarried individuals must be
computed by applying to taxable net income the following schedule of rates:
    (1) On the first $24,270, 5.35 percent;
    (2) On all over $24,270, but not over $79,730, 7.05 percent;
    (3) On all over $79,730, but not over $150,000, 7.85 percent;
(4) On all over $150,000, 9.85 percent.
    (c) The income taxes imposed by this chapter upon unmarried individuals qualifying
as a head of household as defined in section 2(b) of the Internal Revenue Code must be
computed by applying to taxable net income the following schedule of rates:
    (1) On the first $29,880, 5.35 percent;
    (2) On all over $29,880, but not over $120,070, 7.05 percent;
    (3) On all over $120,070, but not over $200,000, 7.85 percent;
(4) On all over $200,000, 9.85 percent.
    (d) In lieu of a tax computed according to the rates set forth in this subdivision, the
tax of any individual taxpayer whose taxable net income for the taxable year is less than
an amount determined by the commissioner must be computed in accordance with tables
prepared and issued by the commissioner of revenue based on income brackets of not
more than $100. The amount of tax for each bracket shall be computed at the rates set
forth in this subdivision, provided that the commissioner may disregard a fractional part of
a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1.
    (e) An individual who is not a Minnesota resident for the entire year must compute
the individual's Minnesota income tax as provided in this subdivision. After the
application of the nonrefundable credits provided in this chapter, the tax liability must
then be multiplied by a fraction in which:
    (1) the numerator is the individual's Minnesota source federal adjusted gross income
as defined in section 62 of the Internal Revenue Code and increased by the additions
required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (11),
and (12), (13), and (16) to (18), and reduced by the Minnesota assignable portion of the
subtraction for United States government interest under section 290.01, subdivision 19b,
clause (1), and the subtractions under section 290.01, subdivision 19b, clauses (8), (9),
(13), (14), (16), and (17), after applying the allocation and assignability provisions of
section 290.081, clause (a), or 290.17; and
    (2) the denominator is the individual's federal adjusted gross income as defined in
section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in
section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (11), and (12), (13), and
(16) to (18), and reduced by the amounts specified in section 290.01, subdivision 19b,
clauses (1), (8), (9), (13), (14), (16), and (17).
EFFECTIVE DATE.This section is effective retroactively for taxable years
beginning after December 31, 2012.

    Sec. 11. Minnesota Statutes 2012, section 290.067, subdivision 2a, is amended to read:
    Subd. 2a. Income. (a) For purposes of this section, "income" means the sum of
the following:
(1) federal adjusted gross income as defined in section 62 of the Internal Revenue
Code; and
(2) the sum of the following amounts to the extent not included in clause (1):
(i) all nontaxable income;
(ii) the amount of a passive activity loss that is not disallowed as a result of section
469, paragraph (i) or (m) of the Internal Revenue Code and the amount of passive activity
loss carryover allowed under section 469(b) of the Internal Revenue Code;
(iii) an amount equal to the total of any discharge of qualified farm indebtedness
of a solvent individual excluded from gross income under section 108(g) of the Internal
Revenue Code;
(iv) cash public assistance and relief;
(v) any pension or annuity (including railroad retirement benefits, all payments
received under the federal Social Security Act, supplemental security income, and veterans
benefits), which was not exclusively funded by the claimant or spouse, or which was
funded exclusively by the claimant or spouse and which funding payments were excluded
from federal adjusted gross income in the years when the payments were made;
(vi) interest received from the federal or a state government or any instrumentality
or political subdivision thereof;
(vii) workers' compensation;
(viii) nontaxable strike benefits;
(ix) the gross amounts of payments received in the nature of disability income or
sick pay as a result of accident, sickness, or other disability, whether funded through
insurance or otherwise;
(x) a lump-sum distribution under section 402(e)(3) of the Internal Revenue Code of
1986, as amended through December 31, 1995;
(xi) contributions made by the claimant to an individual retirement account,
including a qualified voluntary employee contribution; simplified employee pension plan;
self-employed retirement plan; cash or deferred arrangement plan under section 401(k)
of the Internal Revenue Code; or deferred compensation plan under section 457 of the
Internal Revenue Code;
(xii) nontaxable scholarship or fellowship grants;
(xiii) the amount of deduction allowed under section 199 of the Internal Revenue
Code;
(xiv) the amount of deduction allowed under section 220 or 223 of the Internal
Revenue Code;
(xv) the amount of deducted for tuition expenses required to be added to income
under section 290.01, subdivision 19a, clause (12) under section 222 of the Internal
Revenue Code; and
(xvi) the amount deducted for certain expenses of elementary and secondary school
teachers under section 62(a)(2)(D) of the Internal Revenue Code; and.
(xvii) unemployment compensation.
In the case of an individual who files an income tax return on a fiscal year basis, the
term "federal adjusted gross income" means federal adjusted gross income reflected in the
fiscal year ending in the next calendar year. Federal adjusted gross income may not be
reduced by the amount of a net operating loss carryback or carryforward or a capital loss
carryback or carryforward allowed for the year.
(b) "Income" does not include:
(1) amounts excluded pursuant to the Internal Revenue Code, sections 101(a) and 102;
(2) amounts of any pension or annuity that were exclusively funded by the claimant
or spouse if the funding payments were not excluded from federal adjusted gross income
in the years when the payments were made;
(3) surplus food or other relief in kind supplied by a governmental agency;
(4) relief granted under chapter 290A;
(5) child support payments received under a temporary or final decree of dissolution
or legal separation; and
(6) restitution payments received by eligible individuals and excludable interest as
defined in section 803 of the Economic Growth and Tax Relief Reconciliation Act of
2001, Public Law 107-16.
EFFECTIVE DATE.This section is effective retroactively for taxable years
beginning after December 31, 2012.

    Sec. 12. Minnesota Statutes 2012, section 290.0671, subdivision 1, is amended to read:
    Subdivision 1. Credit allowed. (a) An individual is allowed a credit against the tax
imposed by this chapter equal to a percentage of earned income. To receive a credit, a
taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.
(b) For individuals with no qualifying children, the credit equals 1.9125 percent of
the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned
income or adjusted gross income, whichever is greater, in excess of $5,770, but in no
case is the credit less than zero.
(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first
$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than
$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income,
whichever is greater, in excess of $15,080, but in no case is the credit less than zero.
(d) For individuals with two or more qualifying children, the credit equals ten percent
of the first $9,720 of earned income and 20 percent of earned income over $14,860 but less
than $16,800. The credit is reduced by 10.3 percent of earned income or adjusted gross
income, whichever is greater, in excess of $17,890, but in no case is the credit less than zero.
(e) For a nonresident or part-year resident, the credit must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).
(f) For a person who was a resident for the entire tax year and has earned income
not subject to tax under this chapter, including income excluded under section 290.01,
subdivision 19b , clause (9), the credit must be allocated based on the ratio of federal
adjusted gross income reduced by the earned income not subject to tax under this chapter
over federal adjusted gross income. For purposes of this paragraph, the subtractions
for military pay under section 290.01, subdivision 19b, clauses (10) and (11), are not
considered "earned income not subject to tax under this chapter."
For the purposes of this paragraph, the exclusion of combat pay under section 112
of the Internal Revenue Code is not considered "earned income not subject to tax under
this chapter."
(g) For tax years beginning after December 31, 2007, and before December 31,
2010, and for tax years beginning after December 31, 2017, the $5,770 in paragraph (b),
the $15,080 in paragraph (c), and the $17,890 in paragraph (d), after being adjusted for
inflation under subdivision 7, are each increased by $3,000 for married taxpayers filing joint
returns. For tax years beginning after December 31, 2008, the commissioner shall annually
adjust the $3,000 by the percentage determined pursuant to the provisions of section 1(f)
of the Internal Revenue Code, except that in section 1(f)(3)(B), the word "2007" shall be
substituted for the word "1992." For 2009, the commissioner shall then determine the
percent change from the 12 months ending on August 31, 2007, to the 12 months ending on
August 31, 2008, and in each subsequent year, from the 12 months ending on August 31,
2007, to the 12 months ending on August 31 of the year preceding the taxable year. The
earned income thresholds as adjusted for inflation must be rounded to the nearest $10. If the
amount ends in $5, the amount is rounded up to the nearest $10. The determination of the
commissioner under this subdivision is not a rule under the Administrative Procedure Act.
(h) For tax years beginning after December 31, 2010, and before January 1, 2012,
and for tax years beginning after December 31, 2012, and before January 1, 2018, the
$5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph
(d), after being adjusted for inflation under subdivision 7, are each increased by $5,000
for married taxpayers filing joint returns. For tax years beginning after December 31,
2010, and before January 1, 2012, and for tax years beginning after December 31, 2012,
and before January 1, 2018, the commissioner shall annually adjust the $5,000 by the
percentage determined pursuant to the provisions of section 1(f) of the Internal Revenue
Code, except that in section 1(f)(3)(B), the word "2008" shall be substituted for the word
"1992." For 2011, the commissioner shall then determine the percent change from the 12
months ending on August 31, 2008, to the 12 months ending on August 31, 2010, and in
each subsequent year, from the 12 months ending on August 31, 2008, to the 12 months
ending on August 31 of the year preceding the taxable year. The earned income thresholds
as adjusted for inflation must be rounded to the nearest $10. If the amount ends in $5, the
amount is rounded up to the nearest $10. The determination of the commissioner under
this subdivision is not a rule under the Administrative Procedure Act.
(i) The commissioner shall construct tables showing the amount of the credit at
various income levels and make them available to taxpayers. The tables shall follow
the schedule contained in this subdivision, except that the commissioner may graduate
the transition between income brackets.
EFFECTIVE DATE.This section is effective retroactively for taxable years
beginning after December 31, 2012.

    Sec. 13. Minnesota Statutes 2012, section 290.0675, subdivision 1, is amended to read:
    Subdivision 1. Definitions. (a) For purposes of this section the following terms
have the meanings given.
(b) "Earned income" means the sum of the following, to the extent included in
Minnesota taxable income:
(1) earned income as defined in section 32(c)(2) of the Internal Revenue Code;
(2) income received from a retirement pension, profit-sharing, stock bonus, or
annuity plan; and
(3) Social Security benefits as defined in section 86(d)(1) of the Internal Revenue
Code.
(c) "Taxable income" means net income as defined in section 290.01, subdivision 19.
(d) "Earned income of lesser-earning spouse" means the earned income of the
spouse with the lesser amount of earned income as defined in paragraph (b) for the taxable
year minus the sum of (i) the amount for one exemption under section 151(d) of the
Internal Revenue Code and (ii) one-half the amount of the standard deduction under
section 63(c)(2)(A) and (4) of the Internal Revenue Code minus one-half of any addition
required under section 290.01, subdivision 19a, clause (21), and one-half of the addition
that would have been required under section 290.01, subdivision 19a, clause (21), if the
taxpayer had claimed the standard deduction.
EFFECTIVE DATE.This section is effective retroactively for taxable years
beginning after December 31, 2012.

    Sec. 14. Minnesota Statutes 2013 Supplement, section 290.091, subdivision 2, is
amended to read:
    Subd. 2. Definitions. For purposes of the tax imposed by this section, the following
terms have the meanings given:
    (a) "Alternative minimum taxable income" means the sum of the following for
the taxable year:
    (1) the taxpayer's federal alternative minimum taxable income as defined in section
55(b)(2) of the Internal Revenue Code;
    (2) the taxpayer's itemized deductions allowed in computing federal alternative
minimum taxable income, but excluding:
    (i) the charitable contribution deduction under section 170 of the Internal Revenue
Code;
    (ii) the medical expense deduction;
    (iii) the casualty, theft, and disaster loss deduction; and
    (iv) the impairment-related work expenses of a disabled person;
    (3) for depletion allowances computed under section 613A(c) of the Internal
Revenue Code, with respect to each property (as defined in section 614 of the Internal
Revenue Code), to the extent not included in federal alternative minimum taxable income,
the excess of the deduction for depletion allowable under section 611 of the Internal
Revenue Code for the taxable year over the adjusted basis of the property at the end of the
taxable year (determined without regard to the depletion deduction for the taxable year);
    (4) to the extent not included in federal alternative minimum taxable income, the
amount of the tax preference for intangible drilling cost under section 57(a)(2) of the
Internal Revenue Code determined without regard to subparagraph (E);
    (5) to the extent not included in federal alternative minimum taxable income, the
amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and
    (6) the amount of addition required by section 290.01, subdivision 19a, clauses (7)
to (9), (11), and (12), (13), and (16) to (18);
    less the sum of the amounts determined under the following:
    (1) interest income as defined in section 290.01, subdivision 19b, clause (1);
    (2) an overpayment of state income tax as provided by section 290.01, subdivision
19b , clause (2), to the extent included in federal alternative minimum taxable income;
    (3) the amount of investment interest paid or accrued within the taxable year on
indebtedness to the extent that the amount does not exceed net investment income, as
defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include
amounts deducted in computing federal adjusted gross income;
    (4) amounts subtracted from federal taxable income as provided by section 290.01,
subdivision 19b , clauses (6), (8) to (14), and (16); and
(5) the amount of the net operating loss allowed under section 290.095, subdivision
11 , paragraph (c).
    In the case of an estate or trust, alternative minimum taxable income must be
computed as provided in section 59(c) of the Internal Revenue Code.
    (b) "Investment interest" means investment interest as defined in section 163(d)(3)
of the Internal Revenue Code.
    (c) "Net minimum tax" means the minimum tax imposed by this section.
    (d) "Regular tax" means the tax that would be imposed under this chapter (without
regard to this section and section 290.032), reduced by the sum of the nonrefundable
credits allowed under this chapter.
    (e) "Tentative minimum tax" equals 6.75 percent of alternative minimum taxable
income after subtracting the exemption amount determined under subdivision 3.
EFFECTIVE DATE.This section is effective retroactively for taxable years
beginning after December 31, 2012.

    Sec. 15. Minnesota Statutes 2013 Supplement, section 290A.03, subdivision 15,
is amended to read:
    Subd. 15. Internal Revenue Code. For taxable years beginning before January 1,
2012, and after December 31, 2012, "Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended through April 14, 2011; and for taxable years beginning after
December 31, 2011, and before January 1, 2013, "Internal Revenue Code" means the
Internal Revenue Code of 1986, as amended through January 3, 2013.
EFFECTIVE DATE.This section is effective retroactively for property tax refunds
based on property taxes payable after December 31, 2013, and rent paid after December
31, 2012.

    Sec. 16. Minnesota Statutes 2013 Supplement, section 291.005, subdivision 1, is
amended to read:
    Subdivision 1. Scope. Unless the context otherwise clearly requires, the following
terms used in this chapter shall have the following meanings:
    (1) "Commissioner" means the commissioner of revenue or any person to whom the
commissioner has delegated functions under this chapter.
    (2) "Federal gross estate" means the gross estate of a decedent as required to be valued
and otherwise determined for federal estate tax purposes under the Internal Revenue Code.
    (3) "Internal Revenue Code" means the United States Internal Revenue Code of
1986, as amended through January 3, 2013, but without regard to the provisions of section
2011, paragraph (f), of the Internal Revenue Code.
    (4) "Minnesota adjusted taxable estate" means federal adjusted taxable estate as
defined by section 2011(b)(3) of the Internal Revenue Code, plus
(i) the amount of deduction for state death taxes allowed under section 2058 of
the Internal Revenue Code; less
(ii) the amount of taxable gifts, as defined in section 292.16, and made by the
decedent within three years of the decedent's date of death; less
(iii) (ii)(A) the value of qualified small business property under section 291.03,
subdivision 9 , and the value of qualified farm property under section 291.03, subdivision
10 , or (B) $4,000,000, whichever is less.
    (5) "Minnesota gross estate" means the federal gross estate of a decedent after (a)
excluding therefrom any property included therein which has its situs outside Minnesota,
and (b) including therein any property omitted from the federal gross estate which is
includable therein, has its situs in Minnesota, and was not disclosed to federal taxing
authorities.
    (6) "Nonresident decedent" means an individual whose domicile at the time of
death was not in Minnesota.
    (7) "Personal representative" means the executor, administrator or other person
appointed by the court to administer and dispose of the property of the decedent. If there
is no executor, administrator or other person appointed, qualified, and acting within this
state, then any person in actual or constructive possession of any property having a situs in
this state which is included in the federal gross estate of the decedent shall be deemed
to be a personal representative to the extent of the property and the Minnesota estate tax
due with respect to the property.
    (8) "Resident decedent" means an individual whose domicile at the time of death
was in Minnesota.
    (9) "Situs of property" means, with respect to:
    (i) real property, the state or country in which it is located;
    (ii) tangible personal property, the state or country in which it was normally kept
or located at the time of the decedent's death or for a gift of tangible personal property
within three years of death, the state or country in which it was normally kept or located
when the gift was executed; and
    (iii) intangible personal property, the state or country in which the decedent was
domiciled at death or for a gift of intangible personal property within three years of death,
the state or country in which the decedent was domiciled when the gift was executed.
    For a nonresident decedent with an ownership interest in a pass-through entity
with assets that include real or tangible personal property, situs of the real or tangible
personal property is determined as if the pass-through entity does not exist and the real
or tangible personal property is personally owned by the decedent. If the pass-through
entity is owned by a person or persons in addition to the decedent, ownership of the
property is attributed to the decedent in proportion to the decedent's capital ownership
share of the pass-through entity.
(10) "Pass-through entity" includes the following:
(i) an entity electing S corporation status under section 1362 of the Internal Revenue
Code;
(ii) an entity taxed as a partnership under subchapter K of the Internal Revenue Code;
(iii) a single-member limited liability company or similar entity, regardless of
whether it is taxed as an association or is disregarded for federal income tax purposes
under Code of Federal Regulations, title 26, section 301.7701-3; or
(iv) a trust to the extent the property is includible in the decedent's federal gross estate.
EFFECTIVE DATE.This section is effective retroactively for gifts made after
June 30, 2013.

    Sec. 17. Minnesota Statutes 2013 Supplement, section 291.03, subdivision 1, is
amended to read:
    Subdivision 1. Tax amount. (a) The tax imposed shall be an amount equal to the
proportion of the maximum credit for state death taxes computed under section 2011 of
the Internal Revenue Code, but using Minnesota adjusted taxable estate instead of federal
adjusted taxable estate, as the Minnesota gross estate bears to the value of the federal
gross estate. The tax is reduced by:
    (1) the gift tax paid by the decedent under section 292.17 on gifts included in the
Minnesota adjusted taxable estate and not subtracted as qualified farm or small business
property; and
    (2) any credit allowed under subdivision 1c.
    (b) The tax determined under this subdivision must not be greater than the sum of
the following amounts multiplied by a fraction, the numerator of which is the Minnesota
gross estate and the denominator of which is the federal gross estate:
    (1) the rates and brackets under section 2001(c) of the Internal Revenue Code
multiplied by the sum of:
    (i) the taxable estate, as defined under section 2051 of the Internal Revenue Code; plus
    (ii) adjusted taxable gifts, as defined in section 2001(b) of the Internal Revenue
Code; less
(iii) the lesser of (A) the sum of the value of qualified small business property
under subdivision 9, and the value of qualified farm property under subdivision 10, or
(B) $4,000,000; less
    (2) the amount of tax allowed under section 2001(b)(2) of the Internal Revenue
Code; and less
    (3) the federal credit allowed under section 2010 of the Internal Revenue Code.
    (c) For purposes of this subdivision, "Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended through December 31, 2000.
EFFECTIVE DATE.This section is effective retroactively for gifts made after
June 30, 2013.

    Sec. 18. Minnesota Statutes 2013 Supplement, section 297A.61, subdivision 3, is
amended to read:
    Subd. 3. Sale and purchase. (a) "Sale" and "purchase" include, but are not limited
to, each of the transactions listed in this subdivision. In applying the provisions of this
chapter, the terms "tangible personal property" and "retail sale" include the taxable
services listed in paragraph (g), clause (6), items (i) to (vi) and (viii), and the provision
of these taxable services, unless specifically provided otherwise. Services performed by
an employee for an employer are not taxable. Services performed by a partnership or
association for another partnership or association are not taxable if one of the entities owns
or controls more than 80 percent of the voting power of the equity interest in the other
entity. Services performed between members of an affiliated group of corporations are not
taxable. For purposes of the preceding sentence, "affiliated group of corporations" means
those entities that would be classified as members of an affiliated group as defined under
United States Code, title 26, section 1504, disregarding the exclusions in section 1504(b).
    (b) Sale and purchase include:
    (1) any transfer of title or possession, or both, of tangible personal property, whether
absolutely or conditionally, for a consideration in money or by exchange or barter; and
    (2) the leasing of or the granting of a license to use or consume, for a consideration
in money or by exchange or barter, tangible personal property, other than a manufactured
home used for residential purposes for a continuous period of 30 days or more.
    (c) Sale and purchase include the production, fabrication, printing, or processing of
tangible personal property for a consideration for consumers who furnish either directly or
indirectly the materials used in the production, fabrication, printing, or processing.
    (d) Sale and purchase include the preparing for a consideration of food.
Notwithstanding section 297A.67, subdivision 2, taxable food includes, but is not limited
to, the following:
    (1) prepared food sold by the retailer;
    (2) soft drinks;
    (3) candy;
    (4) dietary supplements; and
    (5) all food sold through vending machines.
    (e) A sale and a purchase includes the furnishing for a consideration of electricity,
gas, water, or steam for use or consumption within this state.
    (f) A sale and a purchase includes the transfer for a consideration of prewritten
computer software whether delivered electronically, by load and leave, or otherwise.
    (g) A sale and a purchase includes the furnishing for a consideration of the following
services:
    (1) the privilege of admission to places of amusement, recreational areas, or athletic
events, and the making available of amusement devices, tanning facilities, reducing
salons, steam baths, Turkish baths, health clubs, and spas or athletic facilities;
    (2) lodging and related services by a hotel, rooming house, resort, campground,
motel, or trailer camp, including furnishing the guest of the facility with access to
telecommunication services, and the granting of any similar license to use real property in
a specific facility, other than the renting or leasing of it for a continuous period of 30 days
or more under an enforceable written agreement that may not be terminated without prior
notice and including accommodations intermediary services provided in connection with
other services provided under this clause;
    (3) nonresidential parking services, whether on a contractual, hourly, or other
periodic basis, except for parking at a meter;
    (4) the granting of membership in a club, association, or other organization if:
    (i) the club, association, or other organization makes available for the use of its
members sports and athletic facilities, without regard to whether a separate charge is
assessed for use of the facilities; and
    (ii) use of the sports and athletic facility is not made available to the general public
on the same basis as it is made available to members.
Granting of membership means both onetime initiation fees and periodic membership
dues. Sports and athletic facilities include golf courses; tennis, racquetball, handball, and
squash courts; basketball and volleyball facilities; running tracks; exercise equipment;
swimming pools; and other similar athletic or sports facilities;
    (5) delivery of aggregate materials by a third party, excluding delivery of aggregate
material used in road construction; and delivery of concrete block by a third party if the
delivery would be subject to the sales tax if provided by the seller of the concrete block.
For purposes of this clause, "road construction" means construction of:
    (i) public roads;
    (ii) cartways; and
    (iii) private roads in townships located outside of the seven-county metropolitan area
up to the point of the emergency response location sign; and
    (6) services as provided in this clause:
    (i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
include services provided by coin operated facilities operated by the customer;
    (ii) motor vehicle washing, waxing, and cleaning services, including services
provided by coin operated facilities operated by the customer, and rustproofing,
undercoating, and towing of motor vehicles;
    (iii) building and residential cleaning, maintenance, and disinfecting services and
pest control and exterminating services;
    (iv) detective, security, burglar, fire alarm, and armored car services; but not
including services performed within the jurisdiction they serve by off-duty licensed peace
officers as defined in section 626.84, subdivision 1, or services provided by a nonprofit
organization or any organization at the direction of a county for monitoring and electronic
surveillance of persons placed on in-home detention pursuant to court order or under the
direction of the Minnesota Department of Corrections;
    (v) pet grooming services;
    (vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor
plant care; tree, bush, shrub, and stump removal, except when performed as part of a land
clearing contract as defined in section 297A.68, subdivision 40; and tree trimming for
public utility lines. Services performed under a construction contract for the installation of
shrubbery, plants, sod, trees, bushes, and similar items are not taxable;
    (vii) massages, except when provided by a licensed health care facility or
professional or upon written referral from a licensed health care facility or professional for
treatment of illness, injury, or disease; and
    (viii) the furnishing of lodging, board, and care services for animals in kennels and
other similar arrangements, but excluding veterinary and horse boarding services.
    (h) A sale and a purchase includes the furnishing for a consideration of tangible
personal property or taxable services by the United States or any of its agencies or
instrumentalities, or the state of Minnesota, its agencies, instrumentalities, or political
subdivisions.
    (i) A sale and a purchase includes the furnishing for a consideration of
telecommunications services, ancillary services associated with telecommunication
services, and pay television services. Telecommunication services include, but are
not limited to, the following services, as defined in section 297A.669: air-to-ground
radiotelephone service, mobile telecommunication service, postpaid calling service,
prepaid calling service, prepaid wireless calling service, and private communication
services. The services in this paragraph are taxed to the extent allowed under federal law.
    (j) A sale and a purchase includes the furnishing for a consideration of installation if
the installation charges would be subject to the sales tax if the installation were provided
by the seller of the item being installed.
    (k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer
to a customer when (1) the vehicle is rented by the customer for a consideration, or (2)
the motor vehicle dealer is reimbursed pursuant to a service contract as defined in section
59B.02, subdivision 11.
    (l) A sale and a purchase includes furnishing for a consideration of specified digital
products or other digital products or granting the right for a consideration to use specified
digital products or other digital products on a temporary or permanent basis and regardless
of whether the purchaser is required to make continued payments for such right. Wherever
the term "tangible personal property" is used in this chapter, other than in subdivisions 10
and 38, the provisions also apply to specified digital products, or other digital products,
unless specifically provided otherwise or the context indicates otherwise.
(m) A sale and purchase includes the furnishing for consideration of the following
services:
(1) repairing and maintaining electronic and precision equipment, which service can
be deducted as a business expense under the Internal Revenue Code. This includes, but
is not limited to, repair or maintenance of electronic devices, computers and computer
peripherals, monitors, computer terminals, storage devices, and CD-ROM drives; other
office equipment such as photocopying machines, printers, and facsimile machines;
televisions, stereos, sound systems, video or digital recorders and players; two-way radios
and other communications equipment; radar and sonar equipment, scientific instruments,
microscopes, and medical equipment;
(2) repairing and maintaining commercial and industrial machinery and equipment.
For purposes of this subdivision, the following items are not commercial or industrial
machinery and equipment: (i) motor vehicles; (ii) furniture and fixtures; (iii) ships; (iv)
railroad stock; and (v) aircraft; and
(3) warehousing or storage services for tangible personal property, excluding:
(i) agricultural products;
(ii) refrigerated storage;
(iii) electronic data; and
(iv) self-storage services and storage of motor vehicles, recreational vehicles, and
boats, not eligible to be deducted as a business expense under the Internal Revenue Code.
EFFECTIVE DATE.This section is effective retroactively for sales and purchases
made after June 30, 2013. Any person that paid tax on purchases under the stricken
paragraph (m) after June 30, 2013, may apply for a direct refund. If the purchaser qualifies
for applying for a refund under section 289A.50, subdivision 2a, they must file under that
provision; all others may apply for a direct refund under section 20.

    Sec. 19. Minnesota Statutes 2012, section 297A.68, is amended by adding a
subdivision to read:
    Subd. 45. Telecommunications and pay television services machinery and
equipment. (a) Telecommunications or pay television services machinery and equipment
purchased or leased for use directly by a telecommunications or pay television service
provider primarily in the provision of telecommunications or pay television services
that are ultimately to be sold at retail are exempt, regardless of whether purchased by
the owner, a contractor, or a subcontractor.
(b) For purposes of this subdivision, "telecommunications or pay television services
machinery and equipment" includes, but is not limited to:
(1) machinery, equipment, and fixtures utilized in receiving, initiating,
amplifying, processing, transmitting, retransmitting, recording, switching, or monitoring
telecommunications or pay television services, such as computers, transformers, amplifiers,
routers, bridges, repeaters, multiplexers, and other items performing comparable functions;
(2) machinery, equipment, and fixtures used in the transportation of
telecommunications or pay television services, radio transmitters and receivers, satellite
equipment, microwave equipment, and other transporting media, but not wire, cable,
fiber, poles, or conduit;
(3) ancillary machinery, equipment, and fixtures that regulate, control, protect, or
enable the machinery in clauses (1) and (2) to accomplish its intended function, such as
auxiliary power supply, test equipment, towers, heating, ventilating, and air conditioning
equipment necessary to the operation of the telecommunications or pay television services
equipment, and software necessary to the operation of the telecommunications or pay
television services equipment; and
(4) repair and replacement parts, including accessories, whether purchased as spare
parts, repair parts, or as upgrades or modifications to qualified machinery or equipment.
EFFECTIVE DATE.This section is effective retroactively for sales and purchases
made after June 30, 2013.

    Sec. 20. SALES TAX; TEMPORARY REFUND MECHANISM.
Any purchaser that paid sales tax on items under the stricken paragraph (m) of
Minnesota Statutes, section 297A.61, subdivision 3, that may not file for a refund
under Minnesota Statutes, section 289A.50, subdivision 2a, may apply directly to the
commissioner of revenue for a refund under this section. This provision only applies to
sales made after June 30, 2013, and before July 1, 2014. The application must be made on
forms prescribed by the commissioner and the purchaser may make only one application
for the entire period. Interest on the refund shall be paid at the rate in Minnesota Statutes,
section 270C.405, from 90 days after the refund claim is filed with the commissioner
of revenue. The amount required to make the refunds is annually appropriated to the
commissioner of revenue.

    Sec. 21. REPEALER.
Minnesota Statutes 2013 Supplement, sections 292.16; 292.17; 292.18; 292.19;
292.20; and 292.21, are repealed.
EFFECTIVE DATE.This section is effective for gifts made after June 30, 2013.